The Embracer Group has officially sold Gearbox Entertainment to Take-Two Interactive for $460 million, making it the new owner.
Embracer announced in a press release that Gearbox Software, Gearbox Montreal, Gearbox Studio Quebec, and the Borderlands, Tiny Tina’s Wonderlands, Homeworld, Risk of Rain, Brothers in Arms, and Duke Nukem franchises are being divested.
However, Embracer will keep the publishing rights to Cryptic Studios, Lost Boys Interactive, Captured Dimensions, Hyper Light Breaker, Remnant, and other undisclosed games, as well as Gearbox Publishing San Francisco (previously Perfect World Entertainment, which it wants to rebrand).
The payment for the acquisition ($460 million) will be made entirely in newly issued Take-Two shares. This marks a significant increase from Embracer’s initial purchase of Gearbox for $363 million, which included a combination of cash and shares. Additionally, Embracer had agreed to a potential additional payment of $1.015 billion if Gearbox met certain performance targets within six years.
It’s important to note that Grand Theft Auto 6, a title you may be familiar with, is published by Take-Two, therefore these shares could very well prove beneficial in the years to come. Therefore, despite the clear difference between the amount spent for Gearbox and the selling price (which is enormous), it’s important to keep in mind that $460 million worth of Take-Two shares should increase in value over time.
Embracer will continue to hold ownership of Gearbox Publishing San Francisco, which will undergo a name change before the deal is finalized. Lost Boys Interactive, Captured Dimensions, Star Trek Online, Neverwinter Online, and Cryptic Studios will all remain under Embracer’s umbrella in addition to a single Gearbox studio.
Under Take-Two’s umbrella, Gearbox will become part of the 2K division and will remain under the leadership of CEO and founder Randy Pitchford. It was also disclosed in the announcement that Gearbox is presently working on future Borderlands and Homeworld titles.
Pitchford said, “Joining forces with Take-Two Interactive and 2K will help Gearbox ascend to our next level. Take-Two and 2K have demonstrated repeatedly their commitment to our engine of generating creativity, happiness, and profit. We set the bar for interactive entertainment and achieved remarkable results with groundbreaking, record-setting games when we worked together at arm’s length as partners. I’m incredibly excited about what we can accomplish now that we’re fully aligned as one.”
Executives from both the companies stated the following in the full announcement.
“Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow. Through the transaction, we lower business risk and improve profitability as we transition to becoming a leaner and more focused company." "After evaluating several options for Gearbox, I am happy that we have reached a solution that is in the best interest of all stakeholders. Randy and the team have been great team members throughout the past years, and I would like to thank them all for that. As one of the world’s greatest games developers, I am confident that Gearbox will continue to innovate and thrive in their new home within Take-Two,” says Lars Wingefors, co-founder and CEO of Embracer. ”As a significant long-term Embracer Group shareholder, I believe in the strategy for the Embracer Group going forward and am completely convinced that this transaction is the best possible scenario and an obvious net positive arrangement for Embracer Group, for Take-Two and, of course, for Gearbox Entertainment. My primary interest is always Gearbox, especially our talent and our customers. I want to personally assure fans of our games that this arrangement will ensure that the experiences we have in development at Gearbox will be the best they can possibly be,” says Randy Pitchford, founder and CEO of Gearbox Entertainment.
In a separate statement, Embracer revealed that the deal with Take-Two would significantly reduce its net debt and expected the transaction to have an immediate positive impact on its free cash flow generation.
Well, it is anticipated that the deal would close in the first quarter of the fiscal year 2024–2025. And it would be interesting to see how Take-Two will use Gearbox Entertainment for its benefit.
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